David Morrison  |  30/01/2019 06:55
Last week the euro lurched lower after Mario Draghi warned that risks to the euro area growth outlook had shifted to the downside. The ECB president was speaking after the European central bank kept its key interest rate on hold as expected. But after testing support around 1.1300 the euro-USD bounced, and the pair has begun this week little-changed just above 1.1400.

Sterling continues to recover after it hit a 20-month low against the dollar at the beginning of the year. Cable briefly broke above 1.3200 this morning and is up around 5% since the New Year, despite continued Brexit uncertainty. Tuesday sees another major UK Parliamentary vote as Prime Minister Theresa May tries again to drum up support for her meaningful vote on the Withdrawal Bill.

On Friday President Trump was accused of caving to pressure from the Democrats when he brought a halt to the US government shutdown without obtaining funding for his Mexican wall. However, Mr Trump has warned that another partial shutdown is an option should Congress fail to reach a deal on funding a border wall.  

The record 35-day shutdown has meant that we’ve missed some important US economic data releases including Durable Goods, Retail Sales, Housing numbers, Business and wholesale inventories. We were supposed to get the first look at US fourth quarter GDP this week, but that is expected to be delayed. However, Friday will see the release of Non-Farm Payrolls and the ISM Manufacturing PMI which fell so sharply just one month ago.

Wednesday sees the Fed’s first monetary policy meeting of 2019. While it is certain that there won’t be any changes to rates this time round, analysts will be pouring over the statement and will also pay close attention to Fed Chairman Jerome Powell’s subsequent press conference. Market participants are hoping to hear the Fed’s thinking on its balance sheet reduction programme.
Aside from this, on Monday we have speeches from Mario Draghi and Bank of England Governor Mark Carney while US-China trade talks will take place in Washington between Wednesday and Friday.

Have a good week! 

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